On January 27, 2025, the tech world was shaken by major news. NVIDIA, a company that makes special computer chips for artificial intelligence (AI), saw its stock value drop 17%, more than ever before in a single day. Why? A Chinese company called DeepSeek released a new AI system that can do the same things as American AI companies, but at just a fraction of the cost. This news was so significant that it caused many other technology stocks to fall as well, with the SOX index for computer chip companies dropping 9.2%.
AI expert David Johnston explains why this matters so much in our latest interview.
Big American companies like OpenAI and Meta (formerly Facebook) have spent billions of dollars developing their AI systems. But DeepSeek has shown that using "open-source" technology - where the code is free for anyone to use and improve - can work just as well. Even more surprising, while companies like OpenAI and Anthropic are spending billions (with Stargate announcing $500 billion over five years), DeepSeek created their breakthrough with what Johnston says was merely tens of millions of dollars (the reported $5mm probably understated the investment), which allows it to be much cheaper to run. "I saw an estimate today, you can run it for 30 times less than OpenAI is charging," Johnston points out.
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A Decline of Centralized Control
Johnston says this development is especially important because it confirms that AI technology won't be controlled by governments. "We narrowly avoided sort of the doomsday scenario where the state ran AI," he explains. "State does not have a good record on violence or a lot of things the last century." Just two years ago, it looked like governments might control all AI development, but now open-source technology has changed that future.
Johnston reveals a key reason why big tech companies might struggle to compete: they won't add something called "Web3" capabilities. This means they won't connect their AI to digital wallets that can handle cryptocurrency and make financial transactions. "It's 2025 and Google doesn't have a crypto wallet yet because they don't want to be a financial intermediary," Johnston explains. Without this feature, their AI systems can only give advice - they can't actually help users complete tasks that involve money or contracts.
Another big advantage of DeepSeek's approach is that people can run the AI on their own computers or private servers. Unlike ChatGPT, which requires sending your information to OpenAI's computers, DeepSeek's technology can be used privately. As Johnston says, "The cool thing about an open source model is you can run it locally. It doesn't have to expose any data to anyone."
According to Johnston's recent analysis of "brain power" as a measurement unit, we're approaching a remarkable milestone. "By my calculations, we'll have produced enough GPUs this year to exceed all human brain power. And we're talking 50 trillion hours of brain power versus seven trillion for humans," he explains. This means humanity is about to get what Johnston calls a "5X multiplier on our intelligence." He compares this to how we take horsepower for granted today: "I couldn't travel 10,000 miles, but man, I can get in that car, that train, that plane, and it can take me that far." Similarly, we're entering an era where massive amounts of brain power will be available to each person. Johnston emphasizes for this reason, maintaining U.S. leadership in AI development remains crucial. "It is important that the U.S. and Western powers really understand that we need to be at the leading edge of this because the first adopters get the first benefit," he explains. The U.S. has a particular advantage due to its free speech traditions and fewer restrictions on AI development. This competition between nations and between open-source and corporate models drives innovation, ultimately benefiting users worldwide.
Privacy and Personal Control
This opensource breakthrough in performance is particularly important for everyday users. Instead of AI being controlled by big companies or governments, individuals can have their own AI assistants that truly work for them. These assistants can do more than just answer questions - they can actually complete tasks, make purchases, and handle contracts for their users. Johnston predicts this will make people as much “as 100 times" more productive.
For security, Johnston explains that digital signatures and cryptography will ensure people know exactly who they're dealing with online. This is becoming more important as AI makes it easier to create fake messages and scams. Your personal AI assistant will help protect you from these threats.
While this news might be bad for companies that have spent huge amounts of money on AI development, Johnston sees it as great news for everyone else. He compares it to how Android phones now dominate the market (with 85% of all smartphones) while Apple still provides premium services for those who want them. Similarly, open-source AI will likely become the most common type, while some companies will continue offering special services for businesses willing to pay more.
The bottom line? AI technology is becoming more accessible and useful for regular people, rather than being controlled by a few powerful companies. This change could help everyone be more productive and have better control over their digital lives.